PLASTIC pipes and fittings manufacturer, Proplastics Limited, saw its profit after tax more than doubling to US$1,2 million in its financial year ended December 31, 2024, on the back of stringent overhead management.
The profit after tax increased from US$519 877 in the prior year.
The rise in net profit comes despite a 3% drop in turnover to US$20,6 million from US$21,3 million in the prior year.
“The decline was largely due to changes in product mix and pricing strategies in a competitive environment,” Proplastics chairperson Gregory Sebborn said in a statement accompanying the firm’s financial results for 2024.
“Export sales contributed only 4% of turnover due to cost issues related to the 25% foreign currency surrender policy, coupled with the unavailability of foreign currency on the formal market.”
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The firm is expecting these pressures to continue after the surrender threshold was increased to 30%.
Proplastics seeks to establish a new production plant in Botswana this year to capitalise on tariff benefits and those arising from economic processing zones status.
Sebborn said the cost of sales decreased by 2%, while gross profit dropped 5% to US$6,1 million.
“EBIDTA [earnings before interest, taxes, depreciation and amortisation] improved to US$3 million from US$2,5 million in the prior year, given the stronger earnings performance in the second half of the year as well as stringent overhead management throughout the year,” he said.
“Resultantly, profit before tax grew 19% to US$1,65 million, compared to US$1,38 million recorded in the prior year. The business recorded a profit after tax of US$1,2 million compared to US$520 000 in prior year.”
Total assets rose 8% to US$24,7 million during the period under review from US$22,8 million in the prior year.
The firm was also liquid, recording a current ratio of 1: 1,58, compared to 1:1,36 in the prior year, showing the firm had more than enough to cover its short-term debts.
“The gearing ratio increased to 15% compared to 1,5% in the prior year as the group leveraged on its asset base and low borrowings to bolster working capital,” Sebborn said.
“The group closed the year with cash and cash equivalents of US$357 000 compared to US$377 000 in the prior year.”
During the period under review, the government faced constraints in funding water, irrigation and sanitation projects due to the much-needed upgrade of urban roads ahead of the Sadc Summit held in August last year.
Liquidity constraints, exchange rate volatility and effects of delays in fiscal pronouncements coupled with the adverse effects of the El Nino-induced drought also added pressure to the group’s bottom line.
“The civil construction industry has maintained a high demand for our products, which we expect to continue into the new year,” Sebborn said.
“The group installed additional production equipment towards the end of last year to enhance product availability and this is expected to provide a solid base towards revenue generation in the new year.”
He said improved water levels at Kariba, driven by ongoing rainfall, would have a positive impact on electricity generation.
“This, coupled with the group’s commissioning of the half megawatt solar plant last year, will impact positively on the supply of power for the plant, thereby enhancing our efficiencies,” Sebborn said.
“Raw material availability and pricing are expected to remain stable throughout the year, thereby ensuring constant supply to the plant.”
He said the group expects a stronger performance across all segments, driven by increased private sector investment in infrastructure and the government’s focus on irrigation projects.
